Stryking the Wright deal

BY Richard Summerfield

Medical device manufacturer Stryker Corp has announced that it will acquire smaller rival Wright Medical Group in a deal worth $5.4bn, including convertible notes.

Under the terms of the deal, Wright shareholders will receive $30.75 in cash per share, giving the deal an equity value of $4bn. The agreed price represents a premium of 39.7 percent to the company’s close price on Friday. The boards of both companies have approved the deal, which is expected to close in the second half of 2020, subject to customary closing conditions and pending regulatory approval.

“This acquisition enhances our global market position in trauma & extremities, providing significant opportunities to advance innovation, improve outcomes and reach more patients,” said Kevin Lobo, chairman and chief executive of Stryker. “Wright Medical has built a successful business, and we look forward to welcoming their team to Stryker.”

“We believe this transaction will provide truly unique opportunities and will create significant value for our shareholders, customers and employees,” said Robert Palmisano, executive director, chief executive and president of Wright Medical. “By merging our complementary strengths and collective resources, we will be able to advance our broad platform of extremities and biologics technologies with one of the world’s leading medical technology companies that shares our vision of delivering breakthrough and innovative solutions to improve patient outcomes.”

By acquiring Wright Medical, Stryker will expand its “trauma and extremities business” through Wright Medical's “highly complementary product portfolio and customer base”, the companies said in a statement. Stryker also believes the deal will strengthen its trauma and extremities business in “the fastest growing segments in orthopaedics”.

Founded in 1950, Wright Medical manufactures implants to treat injuries to parts of the body including the shoulders, elbows and ankles, and has recorded global sales approaching $1bn.

The deal is the latest in a series of mergers in the medical device industry. In recent years, 3M agreed to buy wound-care maker Acelity for $6.7bn including debt, and Boston Scientific acquired BTG for £3.3bn in cash. 

News: Stryker boosts bone implants with $4 billion Wright Medical buyout

China-driven M&A in North America plummets in 2019, reveals new report

BY Fraser Tennant

M&A activity in North America instigated by Chinese investors dropped sharply in 3Q 2019, according to a new report by Pitchbook.

In its ‘3Q 2019 North American M&A Report’, the financial information and technology provider reveals that a little over $20bn worth of North American M&A deals with Chinese acquirers have been consummated in 2019 through 3Q –  a massive downturn from the $298.5bn that was invested in 2016.

According to the report, the plummeting M&A activity by Chinese acquirers is due to the increasingly tense relationship between the US and China being played out in the trade war, with a seemingly unending series of tit-for-tat tariffs the order of the day in recent years.

“M&A has been one of the areas hit hardest by the trade war, with deal value for North American target companies with a Chinese acquirer on pace to fall by over 90 percent since peaking in 2016,” states the report. “The US/China trade war rages on and has led to a precipitous decline in cross-border activity, with far fewer Chinese companies willing or able to acquire US companies.”

Furthermore, not only have American and Chinese companies avoided doing deals together, but the US government has occasionally prevented deals, with the Committee on Foreign Investment in the US (CFIUS) blocking a number of major transactions, such as Singapore-based Broadcom’s $100bn-plus attempt to purchase Qualcomm, reportedly on national security grounds.

Beyond the waning M&A activity between the two economic powerhouses, the report notes that North American M&A activity continues apace, with 3Q 2019 seeing robust deal flow totalling over $600bn. Drilling down, eight deals above $10bn closed during the quarter, accounting for over one-third of total deal value.

“In 2019 to date, we have seen over 8000 deals close with an accumulative value of nearly $1.6 trillion, approximately on pace with the first three quarters of 2018,” adds the report. “Much of this quarter’s total value was attributed to just a few colossal deals, such as such as Bristol-Myers Squibb’s  $74bn acquisition of Celgene and BB&T’s $66bn acquisition of SunTrust Bank.”

The report concludes: “We expect M&A value to end the year on a high note, barring any broader economic slowdown.”

Report: 3Q 2019 North American M&A Report

Prologis takes Liberty

BY Richard Summerfield

Prologis Inc has agreed to acquire its rival, industrial real-estate firm Liberty Property Trust, in an all stock deal valued at around $12.6bn, including the assumption of debt.

Under the terms of the deal, Liberty shareholders would receive 0.675 times a Prologis share for each unit they hold, about $61 a share. The deal is expected to close in the first quarter of 2020.

The deal is expected to generate immediate savings of around $120m from administrative costs, operating leverage, lower interest expense and lease adjustments, the companies said in a statement. The acquisition will also bolster Prologis’ presence in a number of target markets, such as Lehigh Valley, Chicago, Houston, Central PA, New Jersey and Southern California.

In order to complete the deal, Prologis has announced that it plans to dispose of approximately $3.5bn of assets on a pro rata share basis. This includes $2.8bn of non-strategic logistics properties and $700m of office properties.

“Liberty and Prologis represent two of the finest teams of real estate professionals and two of the finest portfolios of industrial real estate ever assembled,” said Bill Hankowsky, chairman and chief executive of Liberty. "The joining of these two platforms at this moment, when industrial logistics has become so pivotal to the new economy, will further the industry’s ability to support the nation’s supply chain and enhance value creation for our combined shareholders. It is a testament to Liberty’s outstanding teams of professionals, both present and past.”

“Liberty’s high-quality logistics real estate will strengthen our portfolio as well as our customer roster,” said Eugene F. Reilly, chief investment officer at Prologis. “We are also excited about the caliber of talent at Liberty and expect a number of their employees to join us to help manage the portfolio and execute on capital deployment.”

“Liberty’s logistics assets are highly complementary to our US portfolio and this acquisition increases our holdings and growth potential in several key markets,” said Hamid R. Moghadam, chairman and chief executive at Prologis. “The strategic fit between the portfolios allows us to capture immediate cost and long-term revenue synergies.”

The companies have also identified future synergies with the potential to generate approximately $60m in annual savings, including $10m from revenue synergies and $50m from incremental development value creation.

News: Prologis to buy warehouse rival Liberty in $12.6 billion deal

Cision taken private in $2.74bn deal

BY Richard Summerfield

An affiliate of private equity firm Platinum Equity is to acquire public relations and software company Cision Ltd in a deal worth $2.74bn.

Under the terms of the deal, which has been unanimously approved by Cision’s board members, Platinum Equity will acquire all outstanding shares of Cision for $10 per share in cash, representing a 34 percent premium over Cision’s stock over a 60-day period ending on 21 October, the day before the deal was announced.

The deal, which is expected to close in Q1 2020, will see Cision become a wholly owned entity of the Platinum Equity affiliate. There had been rumours that Cision had been in negotiations with potential new private equity owners since around March.

“This transaction will provide shareholders with immediate and substantial cash value, while also providing us with a partner that shares in our commitment to customers and employees and can add strategic and operational value,” said Kevin Akeroyd, chief executive at Cision. “Based on our extensive engagement with Platinum over the past several months, we are confident that Platinum's support will enable Cision to execute on its strategy and next phase of growth.”

“Cision has a long history of leadership providing software and services to public relations and marketing communications professionals and has developed a growing portfolio of earned media management offerings for the world's leading brands,” said Jacob Kotzubei, a partner at Platinum Equity. “Platinum looks forward to nurturing Cision's core business, supporting and anticipating the diverse needs of the company's customers, and driving new opportunities for innovation. As a private company, Cision will be able to make strategic investments for sustainable and profitable growth, while remaining agile and focused on operational excellence. We are excited to partner with Cision's management team as it embarks on this new chapter.”

According to a statement announcing the deal, Cision may solicit alternative acquisition proposals from third parties during a ‘go-shop’ period from the date of the agreement until 12 November 2019.

News: PR Newswire owner Cision to be taken private for $2.74 billion

$930m biopharma deal sees Alexion acquire Achillion

BY Fraser Tennant

In a transaction that could see it strengthen its position as a leading provider of treatments for rare blood disorders, US biopharmaceutical company Alexion Pharmaceuticals is to acquire fellow biopharma firm Achillion Pharmaceuticals for $930m.

The definitive agreement will see Alexion get its hands on Achillion’s two experimental treatments for the rare blood disorder, paroxysmal nocturnal hemoglobinuria (PNH). Alexion has dominated the market for some years with its flagship drug Soliris.

“Alexion has demonstrated the transformative impact that inhibiting C5 can have on multiple rare and devastating diseases,” said Ludwig Hantson, chief executive of Alexion. “However, we believe this is just the beginning of what’s possible with complement inhibition. Targeting a different part of the complement system – the alternative pathway – by inhibiting Factor D production addresses uncontrolled complement activation further upstream in the complement cascade, and importantly, leaves the rest of the complement system intact, which is critical in maintaining the body’s ability to fight infection.”

Alexion’s acquisition of Achillion is subject to the approval of Achillion shareholders and satisfaction of customary closing conditions and approval from relevant regulatory agencies, including clearance under the Hart-Scott Rodino Antitrust Improvements Act.

“We have established great momentum – discovering and advancing several small molecules into clinical development that have the potential to treat immune-related diseases associated with the alternative pathway of the complement system,” said Joe Truitt, president and chief executive of Achillion. “Having already demonstrated proof-of-concept and proof-of-mechanism with our lead candidate, danicopan (ACH-4471), in PNH and C3G, respectively, we believe there is significant opportunity for Factor D inhibition in the treatment of other diseases as well.

“Alexion is an established leader in developing medicines for complement-mediated diseases, and we look forward to working together to accelerate our objective of bringing novel therapies to patients as quickly as possible and ensuring that the broad promise of this approach is fully realised,” he continued. “We thank our employees, investigators and partners for their incredible work and commitment.”

Pending approvals, the transaction is expected to close in the first half of 2020.

News: Alexion fortifies rare blood disorder drugs business with Achillion deal